Real estate investors may find it helpful to compare hard money lenders in South Carolina. Customer service, interest rates and fees can vary considerably from service to service.
Why use these services?
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In general terms, these loan products tend to be easier to obtain than attempting to work with a commercial bank. Investors often have a need to work quickly to resell property or rehab it to get it occupied or leased. Waiting on the commercial bank to make a decision and process paperwork can be a slow process and many banks are very picky about which people they make loans to. Hard money lenders sometimes have options for people that own the property outright but that are cash poor. For people that may be looking to cash out of a property completely or that want to construct something, this can be a good way to get a loan without having to put a down payment in.
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Why these may be different
Traditional loans often have an amortization schedule that runs 20 to 30 years. Hard money lenders may have some loans that are only 1 to 3 days. This may seem like an odd time line but for property flippers that have a property lined up and a buyer for it, this is all that is needed to conduct the transaction. Many loans like these have a 13 month timeline for repayment and there are some that are called “long term” that run for 5 years.
What to look for and what to avoid
There are potentially dozens of junk fees that can be tacked onto the cost of a loan. These really do nothing but generate revenue for the lender. These can be almost anything but underwriting fees, document preparation fees, application fees and loan processing fees are some of the most common. Investors will want to question any fee that they suspect is a junk fee and ask to have it removed. Alternatively, it can be helpful to look for a lender that states all fees and specifically says “no junk fees.”
The actual fee structure should be outlined fairly well for anyone considering a loan. This includes the interest rate, whether a down payment is required and what percentage of the loan amount is needed for this.
Investors will find that some fees will be listed as a percentage of the loan or a dollar amount. Some lenders require a minimum amount of money as a charge so if the interest rate works out to be less than the dollar amount listed, the dollar amount will be the fee.